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New LTD Company model or DAC

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  • 01-10-2015 9:14am
    #1
    newdigi
    Registered Users Posts: 76 ✭✭


    The companies act 2014 allows new companies to register with just 1 director as opposed to requiring two.

    it allows pre-existing companies to change to one of the two new models (new ltd company or designated activity company).

    From what I understand, if pre-existing companies do nothing, they will automatically convert to a DAC after 18 months.

    I have a LTD company with 2 directors, but would like to change this to just 1 director. Has anyone been through this process (which I believe is really just filling out 1 form), and can anyone see a downside to this?


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    #2
    pedroeibar1
    Closed Accounts Posts: 5,108 ✭✭✭pedroeibar1


    newdigi wrote: »
    From what I understand, if pre-existing companies do nothing, they will automatically convert to a DAC after 18 months.

    No, it converts to LTD. See here on what to do.


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    #3
    newdigi
    Registered Users Posts: 76 ✭✭newdigi


    pedroeibar1 wrote: »
    No, it converts to LTD. See here on what to do.

    oops yes. thanks. i read that line incorrectly.
    the automatic conversion to LTD will still effectively keep the 2 directors in place.

    does anyone see any drawbacks to changing this to a single director company?


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    #4
    dbran
    Registered Users Posts: 2,094 ✭✭✭dbran


    The drawback with a singe director (and/or shareholder) is that if anything happens to that director eg he/she dies, becomes unavailable or incapacitated in some way etc. then there are potential issues as to who can then contract on behalf of the company, get things signed or things done that need to be done.

    For a small company this may not matter so much. It is only when things get big or there is a bit of money involved that things can get messy.

    dbran


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    #5
    pedroeibar1
    Closed Accounts Posts: 5,108 ✭✭✭pedroeibar1


    Mmm……. Most LTDs would have a single shareholder (OK, maybe a spouse also) but is that not the reason why there is a separate Company Secretary - that function cannot be held by the sole director? It should not be too difficult to replace a dead director..... The CoSec calls an EGM, the representative(s) of the deceased director (i.e. those entitled to his/her shares) would appoint their own nominee? A bit of filing at the CRO and off you go!

    IMO the key impact of the new Act is the strengthening of corporate governance issues, which should put fear into those who are not compliant through fecklessness or ignorance. It also will be interesting to see if the ODCE will increase its activity on investigating “Shadow Directors”.


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    #6
    newdigi
    Registered Users Posts: 76 ✭✭newdigi


    pedroeibar1 wrote: »
    Mmm……. Most LTDs would have a single shareholder (OK, maybe a spouse also) but is that not the reason why there is a separate Company Secretary - that function cannot be held by the sole director? It should not be too difficult to replace a dead director..... The CoSec calls an EGM, the representative(s) of the deceased director (i.e. those entitled to his/her shares) would appoint their own nominee? A bit of filing at the CRO and off you go!

    IMO the key impact of the new Act is the strengthening of corporate governance issues, which should put fear into those who are not compliant through fecklessness or ignorance. It also will be interesting to see if the ODCE will increase its activity on investigating “Shadow Directors”.

    the process to remove a director for the purposes of this new company type seem quite simple.

    The only reason I have 2 directors on the company is because that was required to form the company in the first place. I'm 100% shareholder, and the other Director no more wants to be a director than I want them there. It's too messy when documents and accounts need to be signed and they aren't around. Even for banking purposes! I'm currently in the process of opening a new bank account and trying to get all the forms signed and ID together is time consuming so I'm hoping to change to a single director company before I go ahead with that account opening.

    A seperate secretary is still required of course.
    I suppose I was really just wanting to make sure that there were no obvious drawbacks


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